LeonaBio (LONA) risk factors, FY2024 10-K

Risks Related to Our Business and the Development of Our Drug Candidates

1. 01We are a clinical-stage biopharmaceutical company with a limited operating history
2. 02approval is secured for any of our drug candidates, the terms of such approval may limit the scope and use of our drug candidate, which may also limit its commercial potential
3. 03We are developing ATH-1105 as a small molecule aimed at restoring neuronal health. We have not received regulatory approval for ATH-1105 and cannot be certain that our approach will lead to the development of an approvable or marketable product, alone or in combination with other therapies
4. 04establishing the sales and marketing capabilities upon obtaining any marketing approvals to gain market acceptance
5. 05Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve a number of objectives
6. 06attracting, hiring and retaining qualified personnel
7. 07We have concentrated our research and development efforts on the treatment of central and peripheral nervous system degenerative disorders, a field that has seen very limited success in product development
8. 08Our lead drug candidate, ATH-1105, is currently in clinical development for the potential treatment of ALS. It is impossible to predict when or if any of our drug candidates will prove to be effective and safe in humans or will receive regulatory approval
9. 09ADAS-Cog11 and ADCS-ADL23. Based on these results, we decided to pause further development of fosgonimeton and to shift our focus to the clinical development of ATH-1105
10. 10obtaining sufficient supply of drug candidate for use in nonclinical studies or clinical trials from third-party suppliers
11. 11We may expend our limited resources to pursue a particular drug candidate or indication and fail to capitalize on drug candidates or indications that may be more profitable or for which there is a greater likelihood of success
12. 12Our long-term prospects depend in part upon discovering, developing and commercializing additional drug candidates, which may fail in development or suffer delays that adversely affect their commercial viability
13. 13adverse events in the clinical trials
14. 14administrative proceedings and face potential liability and expenses related thereto, which could divert management’s attention, and insurance coverage may not be sufficient to cover all costs and damages. This could have a material adverse effect on our business, operating results and financial condition
15. 15Any “topline”, interim, initial, or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
16. 16Our reporting of topline or final data for our clinical trials may be delayed and our regulatory submissions or receipt of necessary marketing approvals could be delayed or prevented
17. 17We face significant competition, and if our competitors develop and market technologies or products more rapidly than we do or that are more effective, safer, or less expensive than the drug candidates we develop, our commercial opportunities will be negatively impacted
18. 18We may develop drug candidates in combination with other therapies, which exposes us to additional risks

Risks Related to Our Financial Position and Capital Needs

1. 19this would result in significant commercialization expenses related to sales, marketing, manufacturing, and distribution. Furthermore, we expect to continue to incur additional costs associated with operating as a public company
2. 20the economic and other terms, timing of and success of any collaboration, licensing or other arrangements into which we may enter in the future
3. 21We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future
4. 22incur expenses in connection with legal proceedings, and addressing potential stockholder activism
5. 23Adverse events or perceptions affecting the financial services industry could adversely affect our operating results, liquidity, financial condition and prospects
6. 24termination of cash management arrangements or delays in accessing or actual loss of funds subject to cash management arrangements
7. 25other financial institutions, or that they would do so in a timely fashion. In such an event, parties with which we have commercial agreements may be unable to satisfy their obligations to, or enter into new commercial arrangements with, us
8. 26The value of our investments is subject to significant capital markets risk related to changes in interest rates and credit spreads as well as other investment risks, which may adversely affect our operating results, liquidity, financial condition and prospects
9. 27Our ability to use net operating losses to offset future taxable income may be subject to certain limitations
10. 28Changes in tax laws could have a material adverse effect on our business, cash flows, results of operations or financial condition

Risks Related to Strategic Process and Potential Strategic Transaction

1. 29We may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future may not be successful
2. 30We may not realize any additional value in a strategic transaction
3. 31If we are successful in completing a strategic transaction, we may be exposed to other operational and financial risks
4. 32Our board of directors may decide to pursue a dissolution and liquidation. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities

Risks Related to Regulatory Approval and Other Legal Compliance Matters

1. 33not be able to commercialize, or will be delayed in commercializing, our drug candidates, and our ability to generate revenue will be materially impaired
2. 34Obtaining and maintaining regulatory approval of our drug candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our drug candidates in other jurisdictions
3. 35injunctions or the imposition of civil or criminal penalties
4. 36revenue and could require us to expend significant time and resources in response and could generate negative publicity
5. 37We may face difficulties from changes to current regulations and future legislation. Healthcare legislative measures aimed at reducing healthcare costs may have a material adverse effect on our business and results of operations
6. 38additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business
7. 39Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors, which may adversely affect our future profitability
8. 40federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers
9. 41Our employees, independent contractors, consultants, commercial collaborators, principal investigators, CROs, suppliers and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
10. 42If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business

Risks Related to Our Reliance on Third Parties

1. 43We may use strategic collaborations, licensing arrangements or partnerships to accelerate the development and maximize the commercial potential of our programs, and we may not realize the benefits of such collaborations, arrangements or partnerships
2. 44collaborators may own or co-own intellectual property covering our drug products that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual property
3. 45If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks
4. 46We utilize and depend upon independent investigators and collaborators, such as medical institutions, CROs, CMOs, and strategic partners to conduct and support our nonclinical studies and clinical trials under agreements with us
5. 47the misappropriation of our proprietary information, including our trade secrets and know-how
6. 48Our manufacturing process needs to comply with FDA regulations relating to the quality and reliability of such processes. Any failure to comply with relevant regulations could result in delays in or termination of our clinical programs and suspension or withdrawal of any regulatory approvals
7. 49If our third-party manufacturers use hazardous materials in a manner that causes injury or violates applicable law, we may be liable for damages

Risks Related to Our Ability to Commercialize our Drug Products

1. 50Even if approved, our drug candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors and others in the medical community necessary for commercial success
2. 51We have never commercialized a drug candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any drug products on our own or together with suitable collaborators
3. 52If the market opportunity for any drug candidate that we develop is smaller than we believe, our revenue may be adversely affected and our business may suffer
4. 53If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our drug candidates
5. 54a decline in our share price
6. 55neither experimental nor investigational
7. 56A variety of risks associated with marketing our drug candidates internationally may materially adversely affect our business

Risks Related to Our Intellectual Property

1. 57Our success depends on our ability to protect our intellectual property and our proprietary technologies
2. 58countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates
3. 59If the scope of any patent protection we obtain is not sufficiently broad or the term is not sufficiently long, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical product candidates would be adversely affected
4. 60of, or invalidate or render unenforceable, our patent rights, allow third parties to commercialize our drug candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights
5. 61Intellectual property rights do not necessarily address all potential threats to our competitive advantage
6. 62Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Claims by third parties that we infringe their proprietary rights may result in liability for damages or prevent or delay our developmental and commercialization efforts
7. 63require us to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms, or at all, or which might be non-exclusive, which could result in our competitors gaining access to the same technology
8. 64We may not be successful in obtaining or maintaining necessary rights to our drug candidates through acquisitions and in-licenses
9. 65We may be involved in lawsuits to protect or enforce our patents or any current or future licensors’ patents, which could be expensive, time consuming and unsuccessful. Further, our issued patents or any current or future licensors’ patents could be found invalid or unenforceable if challenged in court
10. 66Intellectual property litigation or legal proceedings may lead to unfavorable publicity that harms our reputation and causes the market price of our common stock to decline
11. 67Derivation proceedings may be necessary to determine priority of inventions, and an unfavorable outcome may require us to cease using the related technology or to attempt to license rights from the prevailing party
12. 68Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications or those of any current or future licensors and the enforcement or defense of our issued patents or those of any current or future licensors
13. 69Changes in U.S. patent law, or laws in other countries, could diminish the value of patents in general, thereby impairing our ability to protect our drug candidates
14. 70We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property
15. 71Patent terms may be inadequate to protect our competitive position on our drug candidates for an adequate amount of time
16. 72If we do not obtain patent term extension for our drug candidates, our business may be materially harmed
17. 73We will not be able to protect our intellectual property rights throughout the world
18. 74Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment, and other requirements imposed by regulations and governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
19. 75If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
20. 76If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
21. 77party improperly disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets
22. 78We may be subject to claims that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of third parties
23. 79We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers
24. 80Our rights to develop and commercialize our drug candidates may be subject, in part, to the terms and conditions of licenses granted to us by others
25. 81If we fail to comply with our obligations in the agreements under which we license intellectual property rights or other rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business
26. 82the priority of invention of patented technology
27. 83The patent protection and patent prosecution for some of our drug candidates may be dependent on third parties

Risks Related to Cybersecurity

1. 84that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services
2. 85Data collection is governed by restrictive regulations governing the use, processing and cross-border transfer of personal information

Risks Related to Ownership of Our Common Stock

1. 86If we do not regain compliance with or continue to satisfy the Nasdaq continued listing requirements, our common stock could be delisted from the Nasdaq, which may make it more difficult for investors to sell shares of our common stock and consequently may negatively impact the price of our common stock
2. 87We do not know whether an active market for our common stock will be sustained, and, as a result, it may be difficult for you to sell your shares of our common stock
3. 88The market price of our common stock has been and may continue to be volatile, which could result in substantial losses for investors
4. 89the other factors described in this “Part I, Item 1A – Risk Factors” section
5. 90We and certain of our directors and executive officers have been, and may in the future be, named as defendants in lawsuits that could result in substantial costs and divert management’s attention
6. 91Actions by activist stockholders have in the past been, and may in the future be, disruptive and could cause uncertainty about the strategic direction of our business
7. 92A significant portion of our total outstanding shares may be sold into the market in the near future, which could cause the market price of our common stock to decline significantly, even if our business is doing well
8. 93Our directors, executive officers and significant stockholders own a substantial percentage of our common stock, which could limit your ability to affect the outcome of key transactions, including a change of control
9. 94We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors
10. 95Failure to build and maintain our finance infrastructure and improve our accounting systems and controls could impair our ability to comply with the financial reporting and internal controls requirements for publicly traded companies
11. 96Anti-takeover provisions in our charter documents and under Delaware or Washington law could make an acquisition of us difficult, limit attempts by our stockholders to replace or remove our current management and limit our stock price
12. 97provide that stockholders are permitted to amend the bylaws only upon receiving at least two-thirds of the total votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class
13. 98The loss of any of our key personnel could significantly harm our business, results of operations and competitive position
14. 99Our advisors and consultants are classified as independent contractors, and we can face consequences if it is determined that they are misclassified as such
15. 100If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline
16. 101We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices
17. 102As a public company, we are subject to reporting and other obligations under the Exchange Act, including the requirements of Section 404 of the Sarbanes-Oxley Act, which require annual management assessments of the effectiveness of our internal control over financial reporting
18. 103The potential effects of health epidemics could adversely impact our business, including our nonclinical studies and clinical trials
19. 104changes in clinical site procedures and requirements as well as regulatory requirements for conducting clinical trials during the pandemic
20. 105Attention to ESG (environmental, social and governance) matters may cause us to incur additional costs or expose us to additional risks